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Federal Reserve to increase interest rates by 75 basis points

federalreserve.gov

21–30 of 329 posts

Re: Federal Reserve to increase interest rates by 75 basis points

#21

what does this mean/imply: > In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities

https://www.federalreserve.gov/newsevents/pressreleases/mone...

https://www.federalreserve.gov/newsevents/pressreleases/mone...

The Federal Reserve has been working for the past few months agreeing on a plan to reduce the balance sheet. They are just saying that they are still continuing this work.

Re: Federal Reserve to increase interest rates by 75 basis points

#22

what does this mean/imply: > In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities

In short, it means this line will go down: https://fred.stlouisfed.org/series/WALCL

You can see it went up substantially in 2020 and 2021.

Re: Federal Reserve to increase interest rates by 75 basis points

#23
post #17
post #3

damn, inflation in my country will be crazy after this. our gas prices are already really high (the government had to subsidize it until the end of the year to have a chance of being reelected). now probably this crazy politic will be nullified since the dollar will get more expensive

Dollars becoming more expensive is the exact opposite of inflation. ok I get it they don't live in the US don't need 8 people all posting at the same time to tell me this

Yeah, if you get paid in dollars. I assume by the phrasing of the comment that is not the case.

Re: Federal Reserve to increase interest rates by 75 basis points

#24
post #17
post #3

damn, inflation in my country will be crazy after this. our gas prices are already really high (the government had to subsidize it until the end of the year to have a chance of being reelected). now probably this crazy politic will be nullified since the dollar will get more expensive

Dollars becoming more expensive is the exact opposite of inflation. ok I get it they don't live in the US don't need 8 people all posting at the same time to tell me this

No, that's what happens when your currency inflates. It's all relative.

Re: Federal Reserve to increase interest rates by 75 basis points

#25
post #17
post #3

damn, inflation in my country will be crazy after this. our gas prices are already really high (the government had to subsidize it until the end of the year to have a chance of being reelected). now probably this crazy politic will be nullified since the dollar will get more expensive

Dollars becoming more expensive is the exact opposite of inflation. ok I get it they don't live in the US don't need 8 people all posting at the same time to tell me this

Not when it becomes far more expensive in your home currency to buy dollars.

Re: Federal Reserve to increase interest rates by 75 basis points

#26

what does this mean/imply: > In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities

This is what's called "open market operations," and it's basically the first echelon of attack on inflation. If the Fed sells government (and government agency) securities, then banks buy them, returning money to the Treasury and reducing the banks' lending liquidity. By reducing the money supply, the Fed can put a brake on inflation. The overall implication is that the Fed either wants a sharp anti-inflationary shock, or believes that longer-run secular inflation is in the cards, and is willing to cool the economy to manage that risk.

Re: Federal Reserve to increase interest rates by 75 basis points

#27
post #17
post #3

damn, inflation in my country will be crazy after this. our gas prices are already really high (the government had to subsidize it until the end of the year to have a chance of being reelected). now probably this crazy politic will be nullified since the dollar will get more expensive

Dollars becoming more expensive is the exact opposite of inflation. ok I get it they don't live in the US don't need 8 people all posting at the same time to tell me this

The GP is living in a different country, that doesn't use USD as the currency. They already have high inflation. The change in the US interest rate would be expected to strengthen the dollar. This makes dollar-based imports (i.e. oil and gasoline) more expensive in their local market, fueling inflation further.

Re: Federal Reserve to increase interest rates by 75 basis points

#28

Now if we can only get states (like California) to stop giving out stimulus payments (they literally calling it inflation stimulus; learn economics 101) and drop student debt forgiveness nonsense. The fed is trying to curb inflation, while politicians are trying to get re-elected at any cost, fighting the fed.

California doesn’t have a central bank, so it’s not like it can print money out of thin air like the Federal Reserve.

If they’re giving out stimulus, they must be getting it from tax payers, right?

Re: Federal Reserve to increase interest rates by 75 basis points

#30

Now if we can only get states (like California) to stop giving out stimulus payments (they literally calling it inflation stimulus; learn economics 101) and drop student debt forgiveness nonsense. The fed is trying to curb inflation, while politicians are trying to get re-elected at any cost, fighting the fed.

California doesn’t have a central bank, so it’s not like it can print money out of thin air like the Federal Reserve. If they’re giving out stimulus, they must be getting it from tax payers, right?

Technically speaking, not all state government revenue is tax revenue; states can issue bonds or other debt
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